Allegations by the tax agency are ‘wholly untrue’ and based on ‘falsely crafted information’. From Moneyweb.
The South Africa Revenue Service (Sars) last week won a preservation order against Gold Leaf Tobacco and its directors Simon Rudland and Ebrahim Adamjee.
The preservation order is intended to prevent realisable assets from being sold or dissipated to frustrate the collection of taxes. This follows a months-long investigation by Sars into illicit tobacco, gold and fuel transactions after it won a court order in April to launch an inquiry into Gold Leaf, Simon Rudland and a number of associated companies and believed business associates.
Gold Leaf Tobacco’s co-owner Simon Rudland, the Zimbabwe-based tycoon who was the target of a failed assassination attempt in Johannesburg in 2019, has vowed to fight the preservation order which, he says, was obtained ex parte (a court proceeding involving arguments from one party only), without any notice to Gold Leaf, and was “based on unsubstantiated and wholly untrue allegations.”
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One of Gold Leaf’s brands, RG, reportedly became SA’s largest selling cigarette brand during the Covid lockdowns, when a ban was temporarily placed on the sale of tobacco. SA is believed to be the only country in the world to impose a ban on tobacco, supposedly for health reasons at a time when government was concerned that hospitals would be overrun with Covid patients.
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Massive quantities of cigarettes poured across the Limpopo border from Zimbabwe, and are freely available on the black market at a fraction of the cost of more established brands such as Marlboro, manufactured by Philip Morris. Smokers switched brands during the ban, many of them permanently, because smuggled cigarettes were cheaper than locally produced ones as they were able to side-step paying excise duties. This is reckoned to have cost the fiscus billions of rands in lost revenue each month.
Gold Leaf said it could not be held responsible for cigarettes legitimately bought in Zimbabwe and smuggled across the border.
Gold Leaf’s legal representative, Raees Saint, told Moneyweb that Sars is relying on unnamed informants for its information, and obtained the preservation order ex parte. “We will oppose this preservation order and refute the allegations by Sars, which are simply untrue,” he says. “We haven’t yet had an opportunity to respond fully to all the allegations, but we will do so.”
In a statement to Moneyweb, Rudland said Gold Leaf “maintains its innocence and shall continue its operations with complete transparency with the Revenue Authority, as it has always done. We will continue to make our excise and VAT contributions, amounting to over R2 billion per annum.
“We shall not delve into the merits of the litigation, however, we emphasise that it is appalling to note that Sars [has] opted to rely on falsely crafted information in support of [its] application against Gold Leaf, a taxpayer who makes an enormously significant contribution to the fiscus.
“We will oppose the application and protect our rights under the judicial system and we firmly believe that fairness and justice will prevail.”
Saint refuted allegations that Gold Leaf was running two sets of books, with illicit off-book sales accounting for the majority of the company’s business – prompting Sars to apply for a preservation order before the North Gauteng High Court.
For now, Sars is celebrating the granting of the preservation order. “Sars has been investigating and clamping down on the illicit economy focusing on tobacco, gold and fuel industry over the last year, and this is one of the many enforcement steps executed by Sars,” it said in a statement.
“The conduct of non-compliant taxpayers is depriving government of legitimate resources to the prejudice of both the state and the South African public. In aggressively addressing this scourge, Sars will continue to pursue its mandate without fear, favour or prejudice,” said Sars commissioner Edward Kieswetter.
Tax Justice SA said the high court preservation order against Gold Leaf is a “watershed moment in the battle against organised crime groups who are looting South Africa on an unprecedented scale.” It says the illicit trade in cigarettes robs SA of R19 billion a year in lost revenue.
Simon Rudland’s brother Hamish was the driving force behind the attempted buyout earlier this year of SA’s largest sugar producer, Tongaat Hulett. That deal came to a grinding halt when the Takeover Regulation Panel withdrew a waiver requiring the buyer (Mauritius-based Magister) to extend an offer to all Tongaat shareholders on the grounds that the information supplied to it was incorrect or incomplete.
